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Writing in The Daily Telegraph yesterday, Brexit Secretary David Davis said the UK wants to maintain “the full sweep of economic cooperation that currently exists…with the minimum additional barriers or friction, while returning control to the UK Parliament.” He added the final UK-EU relationship should cover “agriculture and services, including financial services, and be supported by continued intelligent cooperation in highly-regulated areas such as transportation, energy and data,” and warned, “Given the strength and breadth of our links, a deal which took in some areas of our economic relationship but not others would be, in the favoured phrase of EU diplomats, cherry picking.” On the UK’s future regulatory regime, he said, “It makes sense for Britain to place itself at the cutting edge of new technologies and the regulatory regimes they will require…It would therefore be inconsistent to have a situation where we are outside the EU but bound by its every rule and regulation. Instead, we will work to create an economic relationship that delivers for the whole of Europe and is right for the unique circumstances of the UK.”
Separately, The Times recently reported that the EU could delay talks on financial services and aviation until the end of the negotiations, and could exact a high price from the UK in these areas in order to maintain EU27 unity during trade talks. One senior EU official said, “That is where it becomes frankly complicated for our side…Once you go into individual sectors then interests differ.” The Times also reported that the EU could insist the UK signs up to a “level playing field” mechanism to bind it to the standards and regulations of the single market.
Elsewhere, Irish Deputy Prime Minister, Simon Coveney, suggested that the EU would be “generous” if the UK decided to “go the Norway route [for the future UK-EU relationship] and then negotiate around that.”
UK-EU negotiations for a transition period begin this month, with trade talks expected to commence in March. Meanwhile, Prime Minister Theresa May is expected to carry out a cabinet reshuffle next week.
The Daily Telegraph The Times The Irish Times
The government has reportedly held informal talks with the Trans-Pacific Partnership (TPP) group on the possibility of becoming a member post-Brexit. This would make Britain the first member that does not border the Pacific Ocean or the South China Sea. Trade minister Greg Hands insisted geography would not hinder talks saying, “Nothing is excluded in all of this…With these kinds of plurilateral relationships, there doesn’t have to be any geographical restriction.” The eleven members of the TPP group, which include Australia, Japan, Mexico, Singapore and Canada, agreed last November to continue with the agreement, despite the withdrawal of the United States earlier in the year.
Elsewhere, former Treasury Minister Lord O’Neill has criticised the government’s focus on developing future trade links with Commonwealth countries such as Australia and New Zealand. Speaking to Die Welt, he said, “This year, China is going to grow by 6.7 percent. In nominal GDP-dollar terms, China will create a new Australia this year. It will create four New Zealand’s this year.” He also argued that slow UK growth is “self-inflicted” in the way Brexit is being handled, adding, “I think there is considerable uncertainty about the next two or three years for the UK.”
Meanwhile, International Trade Secretary Liam Fox has said, “Brexit is not a time bomb to be defused, but a great opportunity to be embraced,” and called for an end to “the obsession with criticising Brexit.”
Labour’s Shadow Brexit Secretary, Keir Starmer, yesterday said that Labour would force a vote on the issue of the EU charter of fundamental rights at the next stage of the EU (Withdrawal) Bill. He added that the government’s analysis of how rights offered by the EU charter would be maintained in UK law post-Brexit was “woefully inadequate” and “fails to provide any assurance that essential rights will be protected once we leave the EU.” He argued, “We need a cast-iron guarantee in law that the rights contained in the charter will be given the same legal protection as those currently contained in the Human Rights Act.”
Meanwhile, a Department for Exiting the EU spokesman said, “The UK has a longstanding tradition of ensuring our rights are protected. As we leave the EU, we are taking action to ensure that that continues…The EU charter of fundamental rights was never the source of rights in the UK – it was intended to catalogue the rights that already existed in EU law. Under the Withdrawal Bill this law is being converted into UK law on the point we exit the EU.”
French President Emmanuel Macron is expected to call on the UK to help fund the cost of new customs infrastructure at its Channel ports post-Brexit. Macron will meet Prime Minister Theresa May this month. Jean-Paul Mulot, France’s envoy to the UK for the northern region that includes Calais, also told The Dail Telegraph that the UK would “agree to provide some funding eventually,” adding that the easy movement of goods across the Channel was critical for both UK and French industry and jobs.
Separately, Xavier Bertrand, the president of the French Hauts-de-France region that includes Calais and Dunkirk, told the Financial Times, “We shouldn’t seek to punish the British…I don’t want post-Brexit decisions that hurt cross-border regions…The idea is not to lose out but also to gain from it.” He also called for Brexit negotiations to move on to trade talks quickly, saying, “I am pushing the [French] government…The divorce is settled, we must go full steam ahead.”
The Daily Telegraph
The EU’s new regulatory reforms, the Markets in Financial Instruments Directive (MiFID II), today enter into force. These are the biggest European market reforms in a decade. MiFID II is designed to offer increased protection to investors and make European markets more transparent and efficient.
Labour peer Andrew Adonis has resigned from his position as chair of the National Infrastructure Commission, which advises the government, in protest over Prime Minister Theresa May’s handling over Brexit. In his resignation letter, Lord Adonis said, “Brexit is populist and nationalist spasm worthy of Donald Trump,” adding, “After the narrow referendum vote, a form of associate membership of the EU might have been attempted without rupturing Britain’s key trading and political alliances.” He criticised the European Union (Withdrawal) Bill as “the worst legislation of my lifetime.” He also said, “The government is hurtling towards the EU’s emergency exit with no credible plan for the future of British trade and European co-operation, all the while ignoring…crises of housing, education, the NHS, and social and regional inequality which are undermining the fabric of our nation and feeding a populist surge.”
Pro-independence parties achieving a slim majority in last month’s regional election in Catalonia, taking 70 of 135 seats in the Catalan parliament. The anti-independence Ciudadanos party secured the most votes but does not have enough allies to form a government. A majority of 68 seats is needed to form a government.
Following the election, Spanish Prime Minister Mariano Rajoy said, “The divisions are huge. It will take time to mend them and that should be the priority for all political actors – reconciliation within the remit of the law.” He added that Catalonia must “stop acting unilaterally and outside the law”. He also rejected calls from Catalonia’s ousted President, Carles Puigdemont, to meet for talks.
Global Risk Insights
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